The Depository Trust & Clearing Corporation (DTCC) has completed a proof-of-concept designed to improve the netting process for US Treasury and agency repurchase agreement (repo) transactions using distributed ledger technology (DLT).
Alongside DLT developer Digital Asset, both parties have demonstrated a successful netting of “start” leg repo transactions with prior end-of-day net securities obligations in the DTCC environment.
The project aims to allow DTCC to calculate a new net settlement amount at a point in time and record it in a distributed ledger.
“DLT was chosen because of its real-time information-sharing capabilities, enabling all parties to quickly view repo details after trade execution, lowering risks and costs while enabling users to take advantage of the benefits of a central counterparty,” said Michael Bodson, president and CEO at DTCC.
With the first phase completed, DTCC and Digital Asset will now form a stakeholder working group as part of phase two, comprised of market participants active in the $3 trillion per day US repo and related transaction market.
The group aims to collect independent feedback from the working group to ensure the offering meets industry needs.
The next phase is set to be completed by the end of June.